China Should Expand Debt Plan to Ease Pressure on Local Governments, Economist Says

China should sharply increase central government borrowing to ease the financial strain on local governments that has become the biggest drag on the country’s economy, according to a prominent Chinese economist.

Li Daokui, dean of Tsinghua University’s Institute for Chinese Economic Practice and Thinking, said China’s economy has remained broadly sluggish for three years as indebted local governments cut investment and spending, clawed back tax incentives and, in some cases, collected taxes early from businesses.